DEORAH AND CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference under Section 256(1) of the Income-tax Act, 1961, is at the instance of the assessee as well as the Revenue. At the instance of the assessee, the following two questions have been referred :

(2.) AT the instance of the Revenue, the following questions have been referred :

(3.) THE above changes took place during the assessment year 1977-78 for which the relevant previous year is 1976-77. THE firm as originally constituted applied for continuance of registration in Form No. 12 for the period from April 1, 1976, to June 30, 1976. THE firm as constituted with effect from July 1, 1976, applied for registration and filed Forms Nos. 11 and 11A for the remaining part of the accounting year July 1, 1976, to March 31, 1977, for the assessment year 1977-78. THE assessee filed two returns, one for the period ending June 30, 1976, and the other for the period July 1, 1976 to March 31, 1977. THE Income-tax Officer took the view that it was a case of reconstitution of the firm as contemplated under Section 187 of the Act, that the partnership was void on account of the admission of two minors and that the firm was not genuine. On this basis, the Income-tax Officer refused registration and passed an order of assessment under Section 185 of the Act against the reconstituted firm for the whole year.